To Fix Big Tech, We Need to Fix Privacy First

A mid troubling supply-chain disruptions and the highest rates of inflation our nation has seen in four decades, it’s odd that Congress has chosen to take aim at a fully functioning and efficient sector of our economy. Nevertheless, policy-makers have their sights set on the tech industry by means of antitrust reform. The most popular bill to this end is the American Innovation and Choice Online Act, co-sponsored by Senators Amy Klobuchar (D., Minn.) and Chuck Grassley (R., Iowa). That this effort has won a degree of bipartisan support does not make it any less strange.

Nor does it necessarily make it a good idea. To be sure, Big Tech has its critics, but rather than breaking up some of this country’s most successful and yes, innovative, companies, our legislators should focus on Americans’ primary digital concerns: data privacy and federal data-privacy legislation.

In a poll commissioned by NetChoice (where I work as policy counsel), three out of four respondents say that when it comes to online services, they’re most concerned about their privacy and data online. In fact, when asked in the same poll on which tech issues Congress should focus, their top three picks were cyberattacks, child predation, and user privacy. None of these issues relates to antitrust, at least as it has historically been understood.

Unfortunately, supporters of the American Innovation and Choice Act appear to be disregarding their constituents’ priorities entirely by choosing tactics that could make it harder for large companies to respond to privacy and security concerns.

Recently out of committee, the bill includes interoperability requirements that would make it more difficult for covered companies to limit the access of nefarious actors to user data and tools. Meanwhile, provisions in the bipartisan Open App Markets Act — another competition-policy bill, this time aimed at the app-store market — mandate that companies change policies around certain app stores to allow third-party app stores and payment processors outside the protections of the current system. This would undermine the potential security standards that factor into which products consumers choose.

If enacted, both proposals would diminish the trustworthiness of online marketplaces, push the risk of viruses and security breaches onto consumers, expose personal information to scammers and criminals, and even reduce the ability to protect children online — the opposite of what voters want to see.

Instead, Congress can help protect consumers and promote competition through a different approach: privacy legislation. A carefully crafted federal data-privacy law would help promote competition by unburdening small players from a confusing patchwork of state laws.

Currently, this patchwork makes it more difficult and more costly for new entrants and current small businesses to compete with large online players in the digital space. A recent paper by the Information Technology and Innovation Foundation found that persisting under the 50-state model would burden small businesses with $200 billion in costs over the next decade — effectively prohibiting them from entering the market and competing with large incumbents. As we have seen in Europe, larger players are often better able to afford complicated and costly compliance, while smaller players struggle, and investors are deterred. While such burdens could exist in a federal framework, they are exacerbated in a system in which each state has its own rules and associated costs.

A uniform federal data-privacy law, then, succeeds where the proposed antitrust changes and our currency state privacy model fail. It would actually address what Americans care about online and increase opportunities for competition.

While federal privacy legislation would be a legitimate step in the right direction, federal policy-makers must still be careful to balance the trade-offs between innovation, speech, and privacy. While a poorly drafted law with cumbersome regulatory requirements could further entrench the largest players and result in user and innovator frustration, a well-drafted one would give American voters what they want — trust and safety online.

Policy-makers should abandon efforts to change antitrust law in ways that risk increasing the worries over tech policy that concern their constituents most. If there is bipartisan momentum to “do something,” it should be focused on a federal data-privacy standard, not dramatically changing antitrust laws.